10. DEBT AND OTHER FINANCING ARRANGEMENTS

Sysco’s debt consists of the following:



	June 30, 2012		July 2, 2011
	(In thousands)
Short-term bank borrowings, interest at 2.0% as of July 2, 2011	$	-	$	181,975
Senior notes, interest at 6.1%, maturing in fiscal 2012		-		200,092
Senior notes, interest at 4.2%, maturing in fiscal 2013		249,964		253,316
Senior notes, interest at 4.6%, maturing in fiscal 2014		206,673		208,779
Senior notes, interest at 0.55%, maturing in fiscal 2015		297,983		-
Senior notes, interest at 5.25%, maturing in fiscal 2018		498,069		497,724
Senior notes, interest at 5.375%, maturing in fiscal 2019		248,862		248,693
Senior notes, interest at 2.6%, maturing in fiscal 2022		444,271		-
Debentures, interest at 7.16%, maturing in fiscal 2027		50,000		50,000
Debentures, interest at 6.5%, maturing in fiscal 2029		224,617		224,593
Senior notes, interest at 5.375%, maturing in fiscal 2036		499,654		499,639
Senior notes, interest at 6.625%, maturing in fiscal 2039		245,685		245,524
Industrial Revenue Bonds, capital leases and other debt, interest averaging 5.9% as of June 30, 2012 and July 2, 2011, maturing at various dates to fiscal 2026		52,560		58,188
Total debt		3,018,338		2,668,523
Less current maturities of long-term debt		(254,650)		(207,031)
Less short-term bank borrowings		-		(181,975)
Net long-term debt	$	2,763,688	$	2,279,517

The principal payments required to be made during the next five fiscal years on debt outstanding as of June 30, 2012 are shown below:



	Amount
	(In thousands)
2013	$	254,650
2014		210,799
2015		302,135
2016		2,340
2017		1,807

Short-term Borrowings

As of June 30, 2012 and July 2, 2011, Sysco had uncommitted bank lines of credit, which provided for unsecured borrowings for working capital of up to $95.0 million. There were no borrowings outstanding under these lines of credit as of June 30, 2012 or July 2, 2011, respectively.

As of June 30, 2012 and July 2, 2011, the company’s Irish subsidiary, Pallas Foods Limited, had a €10.0 million (Euro) committed facility for unsecured borrowings for working capital. There were no borrowings outstanding under this facility as of June 30, 2012 or July 2, 2011, respectively.

On June 30, 2011, a Canadian subsidiary of Sysco entered into a short-term demand loan facility for the purpose of facilitating a distribution from the Canadian subsidiary to Sysco, and Sysco concurrently entered into an agreement with the bank to guarantee the loan. As of July 2, 2011, the amount outstanding under the facility was $182.0 million. The interest rate under the facility was 2.0% and payable on the due date. The loan was repaid in full on July 4, 2011.

Commercial Paper and Revolving Credit Facility

Sysco has a Board-approved commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $1,300.0 million.

In December 2011, Sysco terminated its previously existing revolving credit facility that supported the company’s U.S. and Canadian commercial paper programs. At the same time, Sysco and one of its subsidiaries, Sysco International, ULC, entered into a new $1,000.0 million credit facility supporting the company’s U.S. and Canadian commercial paper programs. This facility provides for borrowings in both U.S. and Canadian dollars. Borrowings by Sysco International, ULC under the credit agreement are guaranteed by Sysco, and borrowings by Sysco and Sysco International, ULC under the credit agreement are guaranteed by all wholly-owned subsidiaries of Sysco that are guarantors of the company’s senior notes and debentures. The facility expires on December 29, 2016, but is subject to extension.

During fiscal 2012, 2011, and 2010, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from approximately zero to $563.1 million, zero to $330.3 million, and zero to $1.8 million, respectively. There were no commercial paper issuances outstanding as of June 30, 2012 and July 2, 2011, respectively.

Fixed Rate Debt

In February 2012, Sysco filed with the Securities and Exchange Commission an automatically effective well-known seasoned issuer shelf registration statement for the issuance of an indeterminate amount of common stock, preferred stock, debt securities and guarantees of debt securities that may be issued from time to time.

In June 2012, Sysco repaid the 6.1% senior notes totaling $200.0 million at maturity utilizing a combination of cash flow from operations and commercial paper issuances.

In June 2012, Sysco issued 0.55% senior notes totaling $300.0 million due June 12, 2015 (the 2015 notes) and 2.6% senior notes totaling $450.0 million due June 12, 2022 (the 2022 notes) under its February 2012 shelf registration. The 2015 and 2022 notes, which were priced at 99.319% and 98.722% of par, respectively, are unsecured, are not subject to any sinking fund requirement and include a redemption provision which allows Sysco to retire the notes at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the note holders are not penalized by early redemption. Proceeds from the notes will be utilized over a period of time for general corporate purposes, which may include acquisitions, refinancing of debt, working capital, share repurchases and capital expenditures.

The 4.2% senior notes due February 12, 2013, 4.6% senior notes due March 15, 2014, the 5.25% senior notes due February 12, 2018, the 5.375% senior notes due March 17, 2019, the 6.5% debentures due August 1, 2028, the 5.375% senior notes due September 21, 2035 and the 6.625% senior notes due March 17, 2039 are unsecured, are not subject to any sinking fund requirement and include a redemption provision that allows Sysco to retire the debentures and notes at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the debenture and note holders are not penalized by the early redemption.

The 7.16% debentures due April 15, 2027 are unsecured, are not subject to any sinking fund requirement and are no longer redeemable prior to maturity.

Sysco’s Industrial Revenue Bonds have varying structures. Final maturities range from three to 14 years and certain of the bonds provide Sysco the right to redeem the bonds at various dates. These redemption provisions generally provide the bondholder a premium in the early redemption years, declining to par value as the bonds approach maturity.

Total Debt

Total debt as of June 30, 2012 was $3,018.3 million of which approximately 84% was at fixed rates with a weighted average of 4.7% and an average life of 13 years, and the remainder was at floating rates with a weighted average of 2.3% and an average life of one year. Certain loan agreements contain typical debt covenants to protect note holders, including provisions to maintain the company’s long-term debt to total capital ratio below a specified level. Sysco is currently in compliance with all debt covenants.

Other

As of June 30, 2012 and July 2, 2011, letters of credit outstanding were $29.8 million and $23.0 million, respectively.